Harmonised Standards and Firm Productivity: Difference-in-Differences Evidence

One of the main objectives of the European Union is to enhance the competitiveness of companies within its Member States and that may be supported by further development of the Single Market. Introduction of harmonized standards for production of goods and services encourages companies to take advantage of the Single Market by reducing transaction costs. In other words, the EU is adjusting the economic and legal framework in which companies operate in order to remove existing barriers to its vision of a well-functioning Single Market. This paper researches the relationship between these changes and productivity of microeconomic agents – firms. The analysis uses a panel data regression model with difference-in-differences research design built on a sample of affected and unaffected firms as control groups to be able to extract effect caused by the regulation. The article provides evaluation of individual standards and states the direction of effect at each of those. It can be said that while some standards (mostly those with wide applicability) have a positive relation with productivity and some are insignificant. There can be found also one that has a robust significant negative correlation with productivity.